The Housing Industry Association (HIA) has released new home sales data for September, with sales diving 15.7% over the quarter on the back of the Reserve Bank’s aggressive rate hikes:
“This data produced the weakest quarter since June 2020, when the national lockdown drove Australia into its first recession in almost 30 years,” added [HIA chief economist Tim Reardon].
“New home sales fell in the month of September, for the third consecutive month, by a further 4.2 per cent”.
“This reflects the increasing weight that the RBA’s tightening cycle is placing on home buyer borrowing capacity”…
“The RBA’s most acute tightening cycle in almost 30 years is occurring at the same time as the industry is experiencing the fastest increase in home building costs in almost 50 years”.
“These compounding forces will see sales continue to slow and the full impact of the rise in the cash rate is yet to emerge”.
The slowdown in new home sales is also reflected in the Australian Bureau of Statistics’ (ABS) construction finance data, which collapsed 58% from their HomeBuilder peak in August:
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The impact of the declines in new home sales and loans will take some time to flow through to the economy, however, given there is still a significant pipeline of unfinished homes currently under construction.
The full downturn will likely arrive mid next year once the homes currently under construction are completed. By then, the housing industry will likely be in recession just as immigration has ramped-up to record highs.
In turn, the rental market will tighten further, putting upward pressure on rents and throwing thousands of Australians into homelessness.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
